Lennar Gaps Up On Earnings Surprise

After 2 years of losses, homebuilder Lennar (Symbol: LEN) surprised all of Wall St. Thursday morning with a major earnings beat and < gasp > an actual profit. LEN posted profits of $0.19 / share, and while one might question why posting $0.19 is such big news for a company that was posting $2.00 not so long ago, the answer to that question is that analysts were looking for a loss of $0.48 / share. One must also not forget that LEN’s Q4 earnings last year came in at a knee buckling -$5.12 / share.

CEO Stuart Miller said LEN saw its first year-over-year increase in orders since the start of 2006.

As one might expect, shares rallied hard off the good news. The stock opened Thursday morning at $14.93 after closing Wednesday at $13.70, good for a 9% gap. After stalling for a couple hours after the open, shares took off and barely looked back the rest of the day, closing at $15.46 for a one-day gain of 12.85%.

While it would have been nice to see shares finish the day on their highs, this big of a move on such extraordinarily high volume is definitely a positive for big LEN. Also encouraging were the rallies that took place throughout the home-building sector, possibly indicating a sea change in confidence towards the group (though we all know this is subject to change based on even the slightest piece of bad news for the sector).

Due to my general lack of trust for the sector, I’d sit on this one for a few days before going all-in. If LEN can hold its gap, I’d be impressed and willing to change my mind. In particular, I’d like to see a breakout above $17.66, its current 52-week high, set last September 17th.

Disclosure: No positions in LEN.

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